Sheraton Operating Corp. v. Just Corporate Travel

• Decision Date: 03 November 1997
• Docket Number: No. 97-1279(PJA).,97-1279(PJA).
• Citation: 984 F.Supp. 22
• Parties: SHERATON OPERATING CORP., as agent for Woodley Road Associates, Inc., Plaintiff, v. JUST CORPORATE TRAVEL and Cynthia Grim d/b/a Just Corporate Travel, Defendant.
• Court: U.S. District Court — District of Columbia

984 F.Supp. 22

SHERATON OPERATING CORP., as agent for Woodley Road Associates, Inc., Plaintiff, v. JUST CORPORATE TRAVEL and Cynthia Grim d/b/a Just Corporate Travel, Defendant.

No. 97-1279(PJA).

United States District Court, District of Columbia.

November 3, 1997.

Michael Alan Hordell, Washington, DC, for Plaintiff.

William Howard Schladt, Gaithersburg, MD, Alexander Anolik, Marilyn D. Weinstein, San Francisco, CA, for Defendant.

MEMORANDUM ORDER

ATTRIDGE, United States Magistrate Judge.

This matter is before the Court on defendant's, Just Corporate Travel's, motion to dismiss for lack of diversity jurisdiction or, in the alternative, transfer of venue to the Northern District of California [# 16]. Pursuant to 28 U.S.C. § 636(C), the parties consented to proceed before a United States Magistrate Judge for all purposes. Upon consideration of the motion, opposition, reply¹ and the applicable law, and for the reasons explained below, the Court concludes that jurisdiction as well a proper venue is found in the District Court for the District of Columbia.

Diversity Jurisdiction—28 U.S.C. § 1332

Pursuant to 28 U.S.C. § 1332, this Court has original jurisdiction of civil matters where the controversy exists among "citizens of different states" and the amount in controversy exceeds $75,000. For purposes of this statute, a corporation is a citizen of any state in which it is incorporated and of the State where it has its principal place of business. 28 U.S.C. § 1332(c)(1). In its motion to dismiss, Just Corporate argues that there is not complete diversity of citizenship pursuant to 28 U.S.C. § 1332. Specifically, it argues that the Woodley Road Associates' relationship to this action is manufactured for the purpose of creating diversity, and that the 31 properties the Sheraton Operating Corporation [Sheraton] owns in California, the state of citizenship of the defendant, destroys diversity.

The Sheraton, in opposing the motion, explained the relationship between the Sheraton Operating Corporation (acting as an agent for) and Woodley Road Associates (which has been assigned the rights of the owner [pl's opp., exh. C]). It further identified the corporate headquarters or "nerve center" for the Sheraton, a Delaware Corporation, as Boston, Massachusetts; thus, the Sheraton is not a citizen of California for the purposes of this action.² Further, the Sheraton points to the forum selection clause, as well as the business conducted by Just Corporate in Washington, D.C., as the basis for which this action was brought in the District Court for the District of Columbia.

In reply to the Sheraton's opposition, Just Corporate no longer disputes the plaintiff's showing of diversity of citizenship. Instead, the defendant resorts to an entirely new argument—that diversity jurisdiction is defeated by the amount in controversy.

The plaintiff's complaint alleges a loss in hotel income of $133,355.00—well over the $75,000 jurisdictional minimum. Just Corporate disputes this amount by asserting the plaintiff failed to mitigate its damages, that the contract is ambiguous and unconscionable, and that the liquidated damages provision will fail. A plaintiff, however, "does not have to prove exact damages when confronted at the outset with the defendant's motion to dismiss for want of amount in controversy; it is sufficient if the plaintiff can show that the case can go for more than the monetary minimum." 28 U.S.C. § 1332, Commentary on 1988 Revision (emphasis in original). In order for this Court to dismiss this action based on the amount in controversy, it "must be able to say, after crediting all of the plaintiff's factual allegations under the so-called well-pleaded complaint rule, that a verdict in excess of the jurisdictional minimum (now [$75,000]) would have to be set aside as a matter of law." Id. The Court cannot make such a finding, and to allow the defendant's arguments to prevail at this stage would in essence be a premature judgment on the merits, which the Court declines to make.

In sum, the plaintiff has satisfied section 1332(a) and (c), thus original jurisdiction properly lies in this Court.

Forum Non Conveniens— 28 U.S.C. § 1404(a)

In its motion and reply, Just Corporate argues that, in the event diversity jurisdiction is found, that the case should be transferred to the Northern District of California in the interest of justice and for the convenience of the parties and witnesses. A district court may transfer a civil action to any other district "where it might have been brought." 28 U.S.C. § 1404(a). As established above, complete diversity exists among the parties who are citizens of California, District of Columbia, and Delaware. As the defendant is a citizen of California, the diversity action could have been brought in the Northern District of California.

Since diversity and subject matter jurisdiction exist in both the proposed transferor and transferee courts, the Court must consider whether transfer would serve "the convenience of the parties and witnesses" and be "in the interest of justice." 28 U.S.C. § 1404(a).

"The moving party has the burden of showing that the convenience of the parties and witnesses favors transfer ... ordinarily, the `plaintiff's choice of a proper forum is a paramount consideration in any determination of a transfer request.'" Kirschner Brothers Oil, Inc. v. Pannill, 697 F.Supp. 804, 806 (D.Del.1988)(citing Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970)); accord Armco Steel Co. v. CSX Corp., 790 F.Supp. 311, 323 (D.D.C.1991)(citing Harris v. Republic Airlines, Inc., 699 F.Supp. 961, 963 (D.D.C.1988)). District courts retain broad discretion in balancing the asserted conveniences and fairness to the parties. Norwood v. Kirkpatrick, 349 U.S. 29, 32, 75 S.Ct. 544, 546, 99 L.Ed. 789 (1955); Carr v. Bio-Medical Applications of Washington, Inc., 366 A.2d 1089, 1091 (D.C.1976).

Opposing transfer of venue, Sheraton referred the Court to the forum selection clause in the disputed contract by which Just Corporate consented to proceed in "any court of the competent jurisdiction" in the District of Columbia, the situs of the hotel. The contract clause provides in pertinent part:

Any controversy, claim or dispute arising out of or relating to this Contract shall, at the option of the Hotel, be settled in the City in which the Hotel is located ... through an action brought in any court of the competent jurisdiction in the State in which the Hotel is located for trial and determination by such court sitting without a jury. In connection with any such litigation, including appellate proceedings, the prevailing party shall be entitled to recover reasonable attorneys fees and costs. By your execution of this Contract you hereby consent to the jurisdiction of a court of competent jurisdiction in the State in which the Hotel in located and to service of process outside the State in which the Hotel is located pursuant to the applicable requirements of such court in any manner so submitted to it and you expressly waive the right to a trial by jury ...

[Pl's opp., exh. A, pp. 7-8 (emphasis added)]. The contract was executed on January 10, 1996. [Id. at 9].

Although instructive, the forum selection clause is not necessarily controlling. This Court, quoting leading commentators, has noted:

A contractual provision specifying the forum for any litigation arising out of the contract ... cannot be decisive on a motion to transfer. `Congress set down in § 1404(a) the factors it thought should be decisive on a motion for transfer. Only one of these—the convenience of the parties —is properly within the power of the parties themselves to affect by a forumselection clause. The other factors—the convenience of the witnesses and the interest of justice—are third party or public interests that must be weighed by the district court; they cannot be automatically outweighed by the existence of a purely private agreement between the parties.'

Turner & Newall, PLC v. Canadian Universal Ins. Co., 652 F.Supp. 1308, 1311 (D.D.C.1987)(quoting C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3847, quoting Plum Tree, Inc. v. Stockment, 488 F.2d 754, 757-58 (3d Cir.1973) (citation corrected)). Thus, although section 1404(a) "encompasses consideration of the parties' private expression of their venue preferences," Stewart Org. v. Ricoh Corp., 487 U.S. 22, 29-30, 108 S.Ct. 2239, 2244, 101 L.Ed.2d 22 (1988), discretion remains with the Court "to adjudicate motions for transfer according to an `individualized, case-by-case consideration of convenience and fairness.'" Id. (quoting Van Dusen v. Barrack, 376 U.S. 612, 622, 84 S.Ct. 805, 812, 11 L.Ed.2d 945 (1964)).

While taking into account the forum selection clause in the instant dispute, the Court must also consider other factors including, but not limited to, "`the convenience of the witnesses of plaintiff and defendant; ease of access to sources of proof; availability of compulsory process to compel the attendance of unwilling witnesses; the amount of expense for willing witnesses; the relative congestion of the calendars of potential transferee and transferor courts; and other practical aspect [sic] of expeditiously and conveniently conducting a trial.'" Armco Steel Co. v. CSX Corp., 790 F.Supp. at 323-324 (citing SEC v. Page Airways, Inc., 464 F.Supp. 461, 463 (D.D.C.1978)).

First addressing the respective conveniences/inconveniences of the parties, the Court notes that, "[e]ven if a transfer would significantly benefit [the][d]efendant[], the Court will not grant the motion if the result merely would shift the inconvenience from [d]efendant[] to [plaintiff]; the net convenience must increase." Kirschner Brothers, 697 F.Supp. at 807. In this action, the defendant, by affidavit of co-owner of Just Corporate Cynthia Grim, argues that her small company of eight employees located exclusively in Santa Rosa, California, will...